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Mergers and Acquisitions Media Channel 4

5 reasons Channel 4 would be better off in the private sector

By Gordon Young, Editor

April 7, 2022 | 5 min read

The Drum's editor-in-chief isn't as worried about the touted privatization of Channel 4 as much of the ad industry - here he shares five reasons to consider it.

UK culture secretary presses ahead with C4 sale

/ Channel 4

Most people I speak to are actually surprised that Channel 4 - the TV channel the UK government is planning to sell off - is publically owned. In a democracy the potential for conflict of interest is huge. And this is evident in the debate that has been ignited around the issue. A divisive issue.

Historian Andrew Roberts said Channel 4 is a "virulently anti-Tory, crypto-Corbynite propaganda outlet" that deserves to face the "cold winds of competition."

Meanwhile, screenwriter Jed Mercurio, made the case for the opposition when he Tweeted. "The sale of C4 will inflict huge damage on home-grown creative companies, all to silence a critical news outlet."

There is consensus among some that the company is simply being punished because of an apparent anti-Tory bias.

But even if the motivation for privatization is being questioned, are the reasons right? In my view yes, and here are five reasons why.

  • The bitterness of the current row underlines the dangers of media organizations being state-owned. There is always a danger that they will be coerced and that is true across both news reporting and what general content they commission. Ironically, the suggestion that privatization is a punishment-beating, demonstrates why greater distance from the political cauldron might be more comfortable. And of course, as the FT said, many companies from Boots to Asda know what it is like languishing as an unloved asset. This is an opportunity for Channel 4 to be freed from an owner who wants to be shot of it.

  • The world has moved on since the launch of Channel 4 in 1982. Back then there were only three channels, and terrestrial television was the only show in town. Today there are hundreds, and it is the streaming services that are dominant. Channel Four model is no longer sustainable - it lacks scale. Ask anyone under 15 when they last watched it, and some will not even be able to tell you what Channel 4 is. Unless it finds a way of scaling up and disrupting itself, the channel will simply disappear. Now is the time to make the move, as it still has significant revenue - leave it any longer and the channel will not be such an attractive acquisition.

  • Businesses require scale to survive in the land of TV giants. A new partnership with another TV company might allow Channel 4, to benefit from efficiencies in terms of its backroom functions, marketing, distribution, and cross-promotion. Greater efficiencies say some could allow it to divert 100m into production as things stand at the moment.

  • It will enjoy greater operational agility - allowing it to raise additional funding, form strategic partnerships and look for acquisitions, building a global footprint in the process. It can maybe use some of this cash to invest in its programming allowing it to diversify away from advertising, which currently accounts for 90% of its revenue. And of course, as it develops, it should be in a position to invest more, not less in UK production. Ha, but what about its public sector remit, which includes a commitment to use UK independent producers? There is no reason why any deal cannot be contingent on the company retaining some of this remit. In any case, if the base model is not sustainable one wonders, how reliable an investor in production it will be in the years ahead.

  • Time to end an ideological point. Sorry! It is time the UK reminds the world it believes in the private sector. It is fundamentally a force for good, that creates jobs, and wealth and provides funding for all the services we hold dear. Given that I have always found it weird that the state has not trusted it to run a lion's share of the UK broadcasting industry. What sort of message does that send out to the budding business people of tomorrow? The private will offer an environment where Channel 4 can thrive.

Mergers and Acquisitions Media Channel 4

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